Session: State Capitol, Room 30 Juneau, AK 99801-1182 Phone: (907) 465-3873 Fax: (907) 465-3922 Interim: PO Box 1441 Wrangell, AK 99929-1441 Phone: (907) 874-2318 Fax: (907) 874-3470 50 Front Street, Suite 203 Ketchikan, AK 99901 Phone: (907) 225-8088 Fax: (907) 225-0713

Sponsor Statement for SB 94
Education Funding

An Act relating to education funding; and providing for an effective date.

Senate Bill 94 is an attempt to improve the current foundation funding for public schools as set forth in Chapter 17 and to increase the appropriation to fund schools.

SB 94 includes municipal contributions in the public school account. However, the 45% cap has been repealed, thereby altering the required local contribution for municipalities.

This bill requires that all federal impact aid be counted, along with the required local contribution from the local school's "basic need".

In Rural Education Attendance Areas (REAA), the reduction of eligible federal impact aid will be subtracted from basic need. REAA's do not contribute local taxes.

This bill takes funding for vocational education out of the 20% currently in statute for special education, gifted education and bilingual education. The vocational education program will be separately funded . This is an increase of 3% in the formula. Present statutes have reduced the incentive for schools to apply funding to quality vocational education. The result is poor or no vocational education programs to serve students for whom vocational education is the preferred strand. The critical shortage of vocational education programs in our schools is an unintended consequence of past legislative reform. This bill will correct the problem by directing attention to the need for schools to provide a specific level of funding to vocational education.

This bill repeals 14.17.490(d). That provision caused a reduction in the funding floor for certain districts by 40% for new funding generated by the foundation formula.

A declining funding adjustment based on the loss of student enrollments is provided. If enrollment decreases 4% in one year or 7% in two years, the district will receive 75% of the loss in year one and 50% in year two and 25% in year three.

This bill reduces the number of students required to count as a school, from 750 in current statute to 400.

The base student allocation is increased from $3,940 to $4,150, an increase of $210 per student.

Section 14.17.460
(b) - AREA COST DIFFERENTIAL - is repealed and reenacted to read:
(b) The cost factors established under (a) of this section shall be established by the department no later than January 15, 2002. The department will set the cost figures based upon a study of the cost of doing business in each school district. The study will take into account, the cost of living, i.e., groceries, energy, utilities, transportation, medical, property values, and other local costs that contribute to the cost of doing business. Cost differentials will be set for each district with Anchorage at the base of 100%. Various indices and surveys conducted by state, federal and private sources may be used to document cost differentials.

The department will conduct subsequent cost of doing business studies no more than two years apart and set the amount by January 15 every even numbered year. The legislature may adjust differentials to reflect changes between studies.

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